U.S. Bank Reporting Obligations Regarding Their Non-U.S. Correspondent Accounts: FinCEN Adopts Final Rules to Implement CISADA Section 104(e): Upon Request, U.S. Banks Must Request Information on Financial Ties to Iran from Non-U.S. Banks for Which a Correspondent Account is Maintained, and Report to FinCENSullivan & Cromwell LLP - October 17, 2011
On October 11, 2011, final rules issued by the Financial Crimes Enforcement Network (“FinCEN”) of the Department of the Treasury (“Treasury”) to implement Section 104(e) of the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (“CISADA”) became effective. The rules create a mechanism whereby FinCEN can, upon written request, require that a U.S. bank (including a U.S. branch of a non-U.S. bank) make certain inquiries of specified non-U.S. banks for which the U.S. institution maintains a correspondent account, and report information obtained from the non-U.S. banks to FinCEN, along with other information about the non-U.S. banks’ correspondent accounts. In particular, FinCEN may require U.S. institutions to inquire of a specified non-U.S. bank client whether that non-U.S. bank: (1) maintains a correspondent account for an Iranian-linked financial institution designated under the International Emergency Economic Powers Act (“IEEPA”), as identified on the List of Specially Designated Nationals and Blocked Persons (“SDN List”) maintained by Treasury’s Office of Foreign Assets Control (“OFAC”); (2) has processed one or more funds transfers, within the preceding 90 calendar days, for or on behalf of, directly or indirectly, such an Iranian-linked financial institution; or (3) has processed one or more funds transfers within the preceding 90 calendar days for or on behalf of, directly or indirectly, Iran’s Islamic Revolutionary Guard Corps (“IRGC”) or its agents or affiliates, as identified on OFAC’s SDN List. The U.S. bank would be required to submit a report to FinCEN in response to FinCEN’s original request, generally within 45 days. The final rules are very similar to those contained in FinCEN’s proposal, although a few modifications were made in response to public comments.